Finken v. Douglas J. W.

IN THE COURT OF APPEALS OF IOWA
No. 16-2003
Filed January 24, 2018
MARK E. FINKEN,
Plaintiff-Appellee,
vs.
DOUGLAS J. WEST, an individual, and ESTATE OF DOUGLAS M. WEST,
Defendants-Appellees,
and
DOMINA LAW GROUP PC LLO,
Intervenor-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Harrison County, Kathleen A.
Kilnoski, Judge.
An intervenor challenges the denial of its petition to intervene filed pursuant
to Iowa Code section 639.60 (2016). REVERSED AND REMANDED.
Christian T. Williams and Brian E. Jorde of Domina Law Group P.C. L.L.O.,
Omaha, Nebraska, for appellant.
Matthew G. Sease of Kemp & Sease, Des Moines, for appellee Estate of
West.
Heard by Doyle, P.J., and Tabor and McDonald, JJ.
2
MCDONALD, Judge.
This matter comes before the court on appeal from an interlocutory order
denying Domina Law Group’s petition to intervene in an auxiliary writ-of-
attachment proceeding. The proceeding is at law, see Markley v. Keeney, 54 N.W.
251, 251 (Iowa 1893), this court’s review is for the correction of legal error.
I.
The relevant circumstances are as follows. In March 2016, Mark Finken, a
fifty percent owner of Western Marketing Associates Corporation, sued the estate
of Douglas West. West was formerly Finken’s business partner and fifty percent
owner of Western Marketing. Finken asserted two claims against the estate: one
claim for contribution on a joint promissory note Finken and West delivered during
the course of operating Western Marketing; and one claim for conversion of
property. As an auxiliary proceeding to his suit, Finken filed an application for
prejudgment writ of attachment pursuant to Iowa Code chapter 639 (2016). In the
application, Finken sought to garnish funds owed the estate as the result of a
judgment entered in favor of West in a prior suit in which West sought judicial
dissolution of Western Marketing. The district court granted Finken’s application
for prejudgment writ of attachment and ordered funds in the amount of $46,591.10
and future quarterly installments in the amount of $25,758.60 to be paid into the
district court as security for the prejudgment writ of attachment.
After Finken filed his application for prejudgment writ of attachment, Domina
Law Group filed its petition to intervene in the attachment proceeding pursuant to
Iowa Code section 639.60. Domina represented West in the prior suit against
Western Marketing. Domina claimed a priority interest in the attached judgment
3
proceeds by way of an attorney’s fee lien filed pursuant to Iowa Code section
602.10116.
The petition for intervention came on for a scheduling hearing in September
2016. At the hearing, Domina Law Group introduced into evidence the affidavit of
Brian Jorde in support of the petition to intervene. The affidavit was supported with
attachments establishing the judgment in the prior proceeding, the notice of
attorney’s lien on the judgment, and notices of updates to the attorney’s lien on the
judgment. At the scheduled hearing, Finken and the estate resisted Domina’s
petition to intervene in the auxiliary attachment proceeding. Finken and the estate
argued this was an inappropriate forum for relief and Domina was trying to “jump
ahead” of other creditors of West’s estate. The estate raised independent
concerns regarding the lien because the estate had pending in federal court a
malpractice claim against Domina relating to Domina’s representation of West in
the corporate dissolution proceeding. In that same suit, Domina asserted a
counterclaim against the estate for unpaid attorney’s fees. The district court
dismissed the petition to intervene for the following reason:
The court concludes that even if Domina’s lien was perfected
before the prejudgment garnishment ordered in this case, the
amount of attorney fee[s] due to Domina in file CVCV029621 is in
dispute. The court concludes that Domina has recourse to recover
any fees it is owed either in the Arizona probate case or in the
pending federal counterclaim.
Moreover, this court has made no determination of the merits
of the prejudgment garnishment or the claims of the parties in this
file. It is possible that as litigation in this present case continues that
the garnishment will be quashed.
4
Domina timely filed this appeal. The estate filed a responsive brief,
defending the district court’s denial of Domina’s statutory petition for intervention.
Finken has not filed any brief in this appeal.
II.
“Attachment is a non-final process for seizure of property of a debtor in
advance of judgment so that the property will be available for satisfaction of such
judgment as is eventually rendered. Thus, in a sense, it is an execution by
anticipation.” Marlin M. Volz, Jr., 3 Ia. Prac., Methods of Practice § 35:1 (2017).
The attachment proceeding is auxiliary to and independent of the underlying suit.
See Iowa Code § 639.2 (“[I]n all cases the proceedings relative to the attachment
are to be deemed independent of the ordinary proceedings and only auxiliary
thereto.”); A.D. Fletcher & Son v. Gordon, 259 N.W. 204, 205 (Iowa 1935) (“[The
attachment proceeding] is independent of the main action, and a ruling thereon
does not affect the main case.”); Volz, 3 Ia. Prac., Methods of Practice § 35.1
(stating attachment “is a remedial device, and not an independent action”).
The attachment statute provides a mechanism for others to intervene in the
attachment proceeding and assert a claim to the property at issue. Specifically,
Iowa Code sections 639.60 and 639.61 “permit the intervention in attachment
proceedings of a claimant to the attached property or money or an interest in or
lien on it and provide for the investigation of such claim and for such order as may
be necessary to protect the rights of claimant.” In re Lamm’s Will, 109 N.W.2d
708, 711 (Iowa 1961). Such an interest in attached property can include an
attorney’s lien because “[t]he effect of an attorney’s lien is tantamount to an
5
assignment of interest in the judgment.” Grimes Sav. Bank v. McHarg, 251 N.W.
51, 53 (Iowa 1933).
An attorney has a lien for his services upon any money due his
clients in an action prosecuted by him, and in which the judgment
was recovered. Such lien, when perfected, operates as an equitable
assignment of the interest in the judgment, and gives such attorney
an interest thereon from the time it is perfected, by proper entry in
the judgment docket in which the judgment is entered.
Id. A perfected charging attorney’s lien is generally superior to a subsequent
attachment. See Myers v. McHugh, 16 Iowa 335, 337–38 (Iowa 1864).
The estate contends the district court correctly dismissed intervenor’s
petition pursuant to Iowa Rule of Civil Procedure 1.407.1 Rule 1.407 provides that
“anyone shall be permitted to intervene in action” when the applicant has in interest
in “the property or transaction which is the subject of the action and the application
is so situated that the disposition of the action may as a practical matter impair or
impede the applicant's ability to protect that interest.” The estate contends
disposition over the judgment proceeds would not impair or impede Domina’s
interest because Domina has other fora in which to litigate its right to attorney’s
fees and other opportunities to collect its attorney’s fees.
The estate’s argument misses the mark in three respects. First, the estate
does not explain how or why Domina’s ability to pursue other litigation would
protect its statutory right to satisfy its attorney fee lien from the attached property.
1
We question whether the estate, rather than Finken, has standing to argue the matter on
appeal. See Thielen v. Schechinger, 230 N.W. 516, 518 (Iowa 1930) (stating “the contest
between the attaching plaintiff and the intervenor is a contest over the superiority of liens”)
(emphasis added); Bradley v. Bailey, 64 N.W. 758, 760 (Iowa 1895) (noting that the
attachment proceeding stemming from a petition for intervention is one between the
attaching plaintiff and the intervenor). Domina has not raised the issue. We thus address
the merits of the parties’ contentions.
6
Second, Rule 1.407 is inapplicable here. The rule applies only to motions to
intervene in the main action. The main action is separate and distinct from the
auxiliary attachment proceeding set forth in Code chapter 639. See Iowa Code
§ 639.2; A.D. Fletcher & Son, 259 N.W. at 205. The right of intervention at issue
in this case is the statutory right to intervene in the auxiliary attachment proceeding
as set forth in Code sections 639.60 and 639.61. Third, with respect to the
statutory right at issue, the availability of other relief is immaterial. “The availability
of some other, and adequate, remedy is not a bar to the right to intervene.” 7
C.J.S. Right of other claimants to intervene in attachment proceeding § 419 (2015);
Moreland v. Monarch Min. & Mill Co., 178 P. 175, 177 (Mont. 1919).
The estate also contends the district court’s order should be affirmed
because the matter is moot. Specifically, the estate contends Finken and the
estate have reached a settlement agreement and have filed a motion to dismiss
the main suit. The argument is unavailing. Although Finken and West have sought
dismissal of the main action, the district court has not yet granted the motion. The
matter is still pending. More important, the suit between Finken and the estate is
independent of the attachment proceeding. See Iowa Code § 639.2; A.D. Fletcher
& Son, 259 N.W. at 205. Settlement of the main suit has no bearing on the
disposition of the funds held by the court in custodial legis. “In every instance . . .
the contest between the attaching plaintiff and the intervenor is a contest over
superiority of liens.” See Thielen, 230 N.W. at 518. Having taken custody of the
funds, the district court must still determine to whom the funds must be disbursed.
The estate advances a second mootness argument. The estate contends
the matter is moot because Domina’s attorney’s fee lien has been released
7
pursuant to Code sections 602.10117 and 602.10118, which provide for automatic
release of the lien in the event the attorney fails to respond to a demand from the
client for the production of certain documents evidencing the lien. We think this
argument goes to the merits of the petition for intervention rather than mootness.
We reject this argument. See New Amsterdam Casualty Co. v. Bookhart, 290
N.W. 61, 62 (Iowa 1940) (affirming denial of motion to dismiss petition for
intervention filed by attorneys for lien where the claim was in dispute and not
reduced to judgment).
Based on the foregoing, we conclude the district court erred in dismissing
Domina’s petition for intervention in the attachment proceeding filed pursuant to
Code section 639.60. “The right of intervention is, unless otherwise provided by
statute, merely a cumulative, and not an exclusive, remedy and does not preclude
the claimant’s recourse to other remedies.” 7 C.J.S. § 419 (2015). See also
Commercial Credit Plan, Inc. v. Gomez, 80 Cal. Rptr. 534, 536 (Cal. App. Dep’t
Super. Ct. 1969); Alvarez v. Smith, 417 S.W.2d 292, 295 (Tex. App. 1967). The
matter must be reversed and remanded.
On remand, the district court must determine the validity and priority of the
competing claims to the garnished property. See Thielen, 230 N.W. at 518 (“The
provisions of the statute permitting intervention in an attachment suit, and providing
that the intervenor may present his petition, ‘disputing the validity of the
attachment,’ first became a part of our statutory law in the Revision of 1860.”);
Bradley, 64 N.W. at 760 (allowing the party refuting the petition for intervention to
challenge the validity of the general assignment presented by the intervenor).
“Whether the attachment be valid or invalid, the intervenor must first establish his
8
title to, lien on, or interest in, the attached property.” Thielen, 230 N.W. at 518.
Then, the intervenor must “assert the validity of a claim to the attached property.”
Id. “If the intervenor’s claim in and to the property is senior and superior to the
attachment, then the attachment is ‘invalid’ as against the intervenor’s rights, even
though every step in the proceedings in attachment was in exact accordance with
the statute.” Id. The relevant inquiry is the validity and priority of the parties’
interests at the time of the attachment. It is axiomatic that the attaching party
obtains only those rights the prejudgment debtor “had at the time the attachment
was levied, no matter if these rights or obligations were not of record.” City Nat’l
Bank of Marshalltown v. Crahan, 112 N.W. 793, 796 (Iowa 1907).
We express no opinion on the validity of the parties’ respective claims to the
property at issue or the priority of such claims. This should be determined in the
first instance in the district court.
III.
For the foregoing reasons, we vacate the order of the district court
dismissing Domina’s petition for intervention. We remand this matter with the
instruction the district court grant the petition for intervention and continue with
further proceedings not inconsistent with this opinion.
REVERSED AND REMANDED.